Discuss the straight-line depreciation

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Reference no: EM131506279

Question: A start-up biotech company is considering making an investment of $100,000 in a new filtration system. The associated estimates are summarized below:

Annual receipts $75,000

Annual expenses $45,000

Useful life 8 years

Terminal book value (EOY 8) $20,000

Terminal market value $0

Straight-line depreciation will be used, and the effective income tax rate is 20%. The after-tax MARR is 15% per year. Determine whether this investment is an attractive option for the company.

Reference no: EM131506279

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